Some analysts predict 2022 is going to be a rough year for Best Buy. The Motley Fool sees a “growth hangover” coming for the big box consumer electronics chain, with sales slowing compared with a year ago, when federal stimulus checks pumped up people’s bank accounts and Americans faced pressing demands to set up home offices, as well as fill their at-home leisure time. Furthermore, Best Buy faces stiff competition from Amazon and other retailers. Nor can we ignore the ubiquitous, ongoing, and global supply chain difficulties. With all this, even company executives are trying to temper expectations, noting mainly that they expect the business to rebound by 2025.

To get there, Best Buy recently announced that it would be opening four new retail outlet stores, in Chicago, Houston, Phoenix, and Manassas, Va. The company already has 16 outlet stores in operation, spread out around the country. Furthermore, Best Buy will add an outlet shopping section to its website.

These outlet stores sell discounted, discontinued, and open-box products—mostly, other customers’ returns. Each outlet store will also have a Geek Squad, where customers can access tech support. Shoppers will be able to browse and buy merchandise online, then get same-day delivery or pick up at the store, employing the omnichannel retail strategy that experts say customers really want.

In a press release, Best Buy touted another advantage to consumers that is somewhat less personally relevant and instead appears more existential: creating less electronic waste. It claims that with outlet stores, it can benefit the environment, as well as enable customers to do their part in achieving this laudable goal, because when they shop at outlet stores, customers are limiting the amount of waste, linked to products that otherwise would have gone to the landfill. They allow for a longer lifespan for the used technology, in line with the concept of a circular economy. The goal, in Best Buy’s telling, is to keep products in use “for as long as possible through repair, trade-ins and recycling.”

The strategy is not solely altruistic of course. Best Buy anticipates that the outlet stores will draw in new customers while also reengaging existing ones. Notably, its own customer research indicates that at its current outlet stores, 16 percent of customers had never purchased from Best Buy previously, and another 37 percent had not shopped at a Best Buy store in the previous year. Thus, by providing customers with affordable, environmentally more responsible purchasing options, Best Buy is meeting their demands, more broadly and more effectively, in a way that expands its reach and appeal.

Discussion Questions:

1. Why is Best Buy expanding its number of outlet stores?
2. Do you think outlet stores will help Best Buy’s business prospects?
3. Is it smart marketing for Best Buy to talk about the environmental benefits of its outlet stores?

Source: “Best Buy to Open 4 New Outlet Stores, Add New Product Categories,” corporate.bestbuy.com, May 11, 2022; George Anderson, “Has Best Buy Found an Outlet for Future Growth?” Retail Wire, May 12, 2022; John General, “Here’s What Really Happens to the Items You Return Online,” CNN Business, January 30, 2021; Demitri Kalogeropoulos, “Can Best Buy Grow Sales in 2022?” The Motley Fool, May 20, 2022; Serenity Gibbons, “How Companies Are Addressing the E-Waste Problem,” Forbes, October 21, 2021; Nathaniel Meyersohn, “Best Buy Has a New Strategy to Win Bargain Hunters,” CNN, May 11, 2022